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Report reveals startling retirement fund shortfall

News release bluestone – 1
23 October 2006

Report reveals startling retirement funding shortfall

Baby boomers may be financially savvy, but many members of New Zealand’s fastest growing demographic will end their working days with just one third of the money needed to fund a comfortable retirement.

A report commissioned by Bluestone Equity Release shows many baby boomers will not have adequate savings in place and face a funding gap in their retirement.

“The amount of liquid retirement savings at age 65 for a household in 2006 is close to $60,000,” says Bluestone Equity Release CEO Peter McGuinness.

“This is a combination of investment deposits and other relatively liquid assets. The upcoming introduction of the voluntary KiwiSaver scheme is unlikely to have a material impact on those currently nearing retirement.

“We estimate the level of income required for a ‘comfortable living’ for the average New Zealand couple retiring in 2007 to be around $42,000 a year.”

To provide that sort of income after tax, Kiwi couples will need a nest egg of around $400,000 – more than six times the average retirement household savings.

However, while cash poor, baby boomers are asset rich and the Bluestone report, conducted by Trowbridge Deloitte[1], shows there is up to $71.5 billion of wealth tied up in the homes of retired New Zealanders.

The average New Zealander aged 65-plus has more than three times as much equity in property compared to savings.

“Baby boomers are becoming more and more willing to consider the house as a financial asset in their retirement planning,” says McGuinness.

“The report reveals that using reverse mortgages to release some of this equity should become a more popular option for those wanting to bridge the gap between low savings and what is needed for a comfortable lifestyle.

“The Reverse Mortgage sector is in its infancy in New Zealand, but new arrivals and product innovation such as our offering of fixed and capped interest rates are expected to lead to greater activity in the industry,” says McGuinness.

Note to editor – Peter McGuinness, CEO Bluestone Equity Release is available for audio and interview on Mob: +61-(0412)-716 636

- Bluestone Equity Release is launching in New Zealand this month – October 23.

- Its Reverse Mortgages – a form of home equity release - are the first in New Zealand to offer fixed and capped interest rates, offering lifetime protection from interest rate fluctuations

- Its Reverse Mortgages can also be paid in instalments.

- Funding for Bluestone Equity Release is New Zealand is provided by Westpac Bank.

- A full copy of the Trowbridge Deloitte report is available for media on request.


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